Ferrexpo set to ramp up output as earnings rise

 
Suzie Neuwirth
IRON ore producer Ferrexpo yesterday beat forecasts with a 25 per cent rise in earnings and said it plans to ramp up production this year, assuaging concerns about unrest in Ukraine, where it operates.

The FTSE 250-quoted firm said it had issued a special dividend of 6.6 cents (4p) per share “in recognition of the good results for 2013”.

Ferrexpo said the ongoing political conflict over territory in Ukraine had not disrupted operations so far and that it is on track to complete its $647m investment programme to increase the quantity and quality of its pellets.

Production increased by 12 per cent to 10.8 million tonnes in 2013 and is expected to hit 12 million tonnes in 2014. Revenue rose 11 per cent to $1.58bn while core earnings rose 25 per cent to $506m.

“In 2014, the group is well positioned to reduce costs through increased production volumes, as well as a more appropriately valued local currency,” said chairman Michael Abrahams.

“Since the balance sheet date, the Ukrainian Hryvnia has devalued by 16 per cent. This will reduce those operating costs of the group which are denominated in local currency.”

“Profitability continues to improve as investment in the business is bearing fruit,”  said Cailey Barker, analyst at Numis.

“Another solid result but we expect the stock to remain subdued with weaker iron ore prices and Ukraine issues.”